SINGAPORE--Despite the economic slowdown, the appliance server market in Asia Pacific (excluding Japan) remains bullish, with revenues expected to hit US$1.81 billion in 2005, according to International Data Corporation (IDC).

In a report titled Asia Pacific Appliance Server Market Review and Forecast, IDC defines appliance servers as network-enabled devices designed to provide a single dedicated service such as Web caching, email, file/print, Internet access, or pre-defined suite of services.

Last year, the total revenue was US$221.9 million, while in the first quarter of 2001 it was US$72.1 million. This was close to 32 percent of the total 2000 appliance server figure.

By year end, the revenue figure is expected to hit US$384.2 million and will grow further to US$546.7 million in 2002, said IDC Asia Pacific manager for Server and Workstation Research Rajnish Arora. Appliance server revenue is projected to gross US$978.4 million in 2003 and US$1.21 billion in 2004 (see table below).

On the growth in the appliance server market despite the global economic slowdown, Arora said: "It's a new market starting from a small base...there has been better education about the products."

"There were more vendors, particularly in the third and fourth quarter, offering appliance servers and the supply-side push created the demand," he added.

He noted that "although the economic bubble burst last year, spending on IT infrastructure has not slowed down...with markets such as India and China, spending is still happening".

Specifically, network attached storage (NAS) filers made up the biggest chunk of the total appliance server market--between 40 percent and 45 percent--last year and the first quarter of 2001.

"One of the reasons why NAS is the biggest contributor to the appliance server market is that it has been around longer than other sectors...It (NAS) have been around three to four year while the other areas (for instance, security, caching and Web servers) have been in the market about one year," Arora explained.

Besides, "NAS products have a high value as (the cost of) one unit could potentially scale up to US$1 million", while other segments such as Web servers "rarely cross the US$50,000 mark", he added.

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